By Matt Lindsay, President
Audience revenue is a growing component of the digital business model, but it often comes at the cost of advertising inventory. As news media companies are struggling to support their newsrooms through digital advertising, subscription revenue offers a growing and stable revenue source. In fact, digital subscription business models have become popular for media and non-media companies.
However, as publishers implement a subscription revenue strategy, they must consider the potential for lost advertising revenue from reduced site traffic. As digital publishers limit the public’s access to their content by putting it behind a paywall, they place some advertising inventory at risk. A membership model strategy, such as that pursued by De Correspondent in the Netherlands, or a contribution revenue strategy, pursued by The Guardian in London, may alleviate some of this lost advertising revenue. But all audience-based revenue strategies will have some effect on advertising inventory.
Advertising revenue will also be at risk due to the product changes required to make a digital product compelling to a paid audience. Improving the user experience typically requires reducing the number of advertisements on a site relative to a pure advertising-revenue business strategy.
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